Promoting regular labor supply among the urban poor

Low and irregular labor force participation, high labor turnover and absenteeism are major impediments to productivity in poor countries. We hypothesize that workers have difficulty providing regular labor supply in the formal sector because they lack the habit of doing so. We design a randomized evaluation with urban casual laborers in India, harnessing the predictions of a habit formation model. Laborers are provided incentives to boost their labor supply to urban labor stands -- their primary source of regular employment -- over a 2-month period. We examine the persistence of effects on labor supply (and earnings) once incentives are removed. The pilot results provide strong preliminary support for our hypothesis.